(Tax Update) Will You Be Liable If Your Boss Gets Caught for Tax Evasion?

You’ve been working as an admin for six years, issuing invoices for your company.

Now, with the introduction of e-Invoicing, you’re starting to worry—what if your boss gets caught for tax evasion? More importantly, if the authorities investigate your boss, will you also be held responsible?

Under Malaysian tax law, employees who knowingly assist in tax evasion can be held accountable under the Income Tax Act (ITA) 1967.

If you’ve been handling invoices and suspect something is off, here’s what you need to know.

🔴 Section 114(1) of the ITA 1967 – Wilful Evasion of Tax

If you knowingly help your boss evade tax, you could face:

✅ A fine between RM1,000 and RM20,000

✅ Imprisonment for up to 3 years

✅ Both, plus a penalty of 300% of the tax undercharged

🔴 Section 113(1)(b) of the ITA 1967 – Providing Incorrect Information

If you issue invoices knowing they will be used for tax evasion, you may be liable for:

✅ A fine between RM1,000 and RM10,000

✅ A penalty of 200% of the tax undercharged

🔴 Section 114(1A) of the ITA 1967– Assisting Without Reasonable Care

Even if you didn’t actively commit tax fraud but failed to exercise due diligence, you could still be held responsible. Penalties include:

✅ A fine between RM2,000 and RM20,000

✅ Imprisonment for up to 3 years

✅ Both

🚨 LHDN's Public Ruling

According to Public Ruling No. 8/2000, tax evasion includes falsifying records or issuing false invoices. Employees who knowingly participate in such acts can be charged under Section 114 of the ITA 1967.

🚔 Recent tax evasion reported cases

💰 Lua Wen Shin (director) – Evaded RM550,000 in taxes

💰 Syed Azhar Syed Sahat (director) – Failed to report RM129,843 in taxes

💰 Yusof Ahmad (director) – Fined RM1.284 million for evading RM1.78 million in taxable income

These cases prove that LHDN is cracking down hard on tax fraud.

There are no specific reported cases in Malaysia directly implicating employees such as accountants or financial controllers in tax evasion based on my search results provided. Please correct me if I am wrong.

Will the director blame you?

In Malaysia, when things go wrong, people love shifting the blame—whether to the government, political parties, football club, or even tax agents.

Now, ask yourself : Will your boss take full responsibility, or will he push the blame onto you?

If you were the one issuing invoices, don’t be surprised if your name gets dragged into the investigation.

With e-Invoicing, tax authorities will have real-time tracking of transactions. The days of faking invoices and under-reporting income are coming to an end.

If your boss has been playing the system, it’s only a matter of time before the authorities catch up. Make sure you’re not caught in the crossfire when the investigation starts.

PS : Authored by Mr Koh Teck Peng, the Group Principal, in his personal LinkedIn post https://bit.ly/3WMr4Ge